Retailers should be investigated with little or no warning by the Groceries Adjudicator to ensure they are treating suppliers and farmers fairly, according to the Tenant Farmers Association (TFA).

The soon-to-be appointed adjudicator must have “parachute powers to investigate concerns on a proactive, no-notice or short-notice basis”, TFA chief executive George Dunn said.

Earlier this month, the Bill to create a Groceries Code Adjudicator tasked with enforcing the Groceries Supply Code of Practice (GSCOP) was published in the House of Lords.

Under the law, an adjudicator could arbitrate in disputes between retailers and suppliers, investigate confidential complaints from direct and indirect suppliers and name and shame, or even fine supermarkets that break the rules, the Department for Business Innovation and Skills said.

Dunn pointed to the recent prices changes in the dairy sector as an example of where suppliers have suspected retailer pressure causing a domino effect in prices across the processing sector.

“If the adjudicator had the power to ‘parachute in’ to a retailer or group of retailers on a particular issue when there was a concern of unfair practice like this, it would be able to get to the core of the issue quickly,” he said. “If retailers are made aware that they are at risk of an inspection at any time, it will provide an incentive to ensure that they maintain high standards of compliance with the code at all times.

“The powers that we are seeking already exist in other sectors such as financial services, schools and provision of social care. For something as vital as the food that we eat and the security of its supply long-term, similar powers are required to ensure compliance with the rules established for the greater good of us all,” Dunn added.

Business minister Norman Lamb said supermarkets will be required to pay farmers and suppliers on time and won’t be able to scrap arrangements with them “at the drop of a hat”.

“Free and fair competition is the key to a healthy market and by preventing retailers from transferring excessive risk to their suppliers, we will support investment and innovation in the supply chain,” he added.

The government has come under criticism for being too slow to appoint a watchdog to oversee the GSCOP, which passed into law in February 2010.